Private Equity Investment Opportunities for Retail Investors

Abstract

This exploratory research paper, primarily based on secondary literature reviews, analyses the private equity (PE) investment access channels that currently exist for retail investors in the European Union (EU). The PE market is traditionally reserved to institutional investors due to legislative limitations and minimum investment requirements. However, the rapid growth of the industry in the last decade, and strong returns delivered to institutional investors, make PE also attractive to retail investors, who are mostly excluded from the asset class. The research provides an overview of this market and the legislative framework that governs the retail investor access to alternative investments in the EU. Ten private and public market PE investment vehicles are assessed using a framework developed by the authors to enable comparability of vehicles from retail investor perspective. From this analysis, the authors derive an investment selection process, which may be used to guide retail investors in their choice of PE investment options. The paper concludes with findings about the existing limitations of private and public PE investment vehicles from retail investor perspective and makes recommendations for what can be done to increase retail investor exposure to the PE market.